Hispanic media and entertainment companies can thank

Ricky Martin

for shaking his bon-bon and

Jennifer Lopez

for taping on that

Versace

dress.

The Univision File

Current P/E: 77.9

52-Week Range: $62.69-$24

Change From 52-Week High: -36.7%

Shares Outstanding: 206.4 million

Source: Morningstar

As Hispanic entertainment has become more mainstream, mainstream advertisers and investors have begun paying attention to the Hispanic market. Amid this increasing interest,

(UVN)

Univision, the No. 1 Hispanic network, has grown into the fifth-largest network overall in the U.S.

And fund managers and analysts tell Gut Check this isn't the only compelling figure stacked up in Univision's favor, citing Univision's 82% prime-time market share among Hispanic viewers vs. just 15% for its closest competitor,

Telemundo

.

A rapidly expanding Hispanic population and the realization on Madison Avenue that Hispanics form an important market that's only going to get bigger promise sustained growth for Univision and other Hispanic media and entertainment companies for the foreseeable future, they say. Fund skippers also like the fact that Univision replaced

Union Carbide

in the

S&P 500

on Feb. 6; index funds tracking this index now have no choice but to include Univision in their portfolios.

Important questions remain about Univision, though. First of all, there's the question of how strong Univision's ad revenues will be in a year widely predicted to be lackluster for advertising sales. There's also the larger question of whether Univision can remain the No. 1 Spanish-language network and continue to appeal to a Hispanic population that's getting increasingly younger. The stock, which was up 184% in 1999, also suffered a 19.9% decline last year amid slower-than-expected growth and the departure of its president, and it still sports a pricey P/E of 78 times trailing earnings.

Despite these concerns, fund skippers remain overwhelmingly bullish on the stock, citing the demographics of the Hispanic market and the network's tremendous popularity.

David Brady, senior portfolio manager of the

(SRFCX)

Stein Roe Capital Opportunities fund, has made UVN 2% of his $583 million portfolio because of the rapidly growing Hispanic population. According to the

U.S. Census Bureau

, the Hispanic population in the U.S. is expected to grow from the current 34 million, or 12% of the U.S. population, to 61 million, or 18% of the projected U.S. population.

Mainstream advertisers so far have spent little to reach this population, with

Hispanic Business

magazine estimating that only 2% of total U.S. advertising spending goes to reaching Hispanics, but Brady says that's starting to change. Mainstream advertisers like

Procter & Gamble

,

Colgate

and

General Motors

are advertising on Univision because they realize the significance of the market, he says.

Gordon Hodge, a partner with

Thomas Weisel

, believes that the growth of the Hispanic population -- Census figures have it growing nearly 6.5 times the rate of the rest of the population over the next 24 years -- gives Univision "a ratings increase bias." He reasons that even if Univision doesn't remain the No. 1 network, it should still be able to deliver strong audience numbers.

Still, not everyone is shouting "Yo quiero Univision!"

UVN is currently down 9.6% for the year, according to Morningstar, with Stein Roe's Brady attributing its decline to the weaker economy and soft ad sales.

Also, UVN's lofty P/E ratio concerns even some managers who hold Univision, including David Kaslow, a senior portfolio manager who has a 1.89% stake of his $406 million

(NEGRX)

Nations Midcap Growth fund in UVN. "Hispanic media stocks are still in the stratosphere," concurs Hodge.

For its part, the company, which met fourth-quarter estimates of 15 cents a share this past Monday, said it expects revenue growth to be between 12% and 17% for 2001, despite slower growth in the first quarter.

On the earnings call, Andrew Hobson, an executive vice president with Univision, said that even if ad industry revenues don't pick up significantly by the second half of the year, Univision's ratings dominance should insulate it from the soft ad sales expected for 2001.

Merrill Lynch

analyst Jessica Reif Cohen disagrees. "The Spanish-language marketplace is not wholly insulated, especially from weakness in the domestic automotive, telecom and budget retail advertising categories," which should be weak at least through the first half of 2001, Reif Cohen says.

The strength of Univision's programming is also of concern to some. Univision recently signed deals for boxer

Oscar de la Hoya

and the 2002 and 2006

World Cup

soccer games, and is still a big draw among Hispanic women with its melodramatic "novelas rosas" from Mexico's

Televisa

. But competitor Telemundo recently imported several noteworthy soap operas of its own that are creating a big buzz in the Latin American community, says Wayne Friedman, L.A. bureau chief of

Advertising Age

.

On the other hand, David W. Miller, an analyst with Sutro & Co., says that while Telemundo has created momentary buzz over some of its programs, particularly

Betty, la Fea

, Telemundo has never done more than create momentary interest in some of its programs.

Miller also notes that it will be critical for Univision to continue to make major strategic acquisitions along the lines of

USA Broadcasting

, which Univision spent $1.1 billion to acquire last December, Miller adds. The acquisition brings 13 stations in such key markets as New York, Los Angeles and Miami to Univision's stable, for a total of 19 owned and operated stations, 33 affiliates and 1,093 cable stations. To remain dominant, Univision will need to make similar acquisitions in the future, Miller says.

Meanwhile, Brady of the Stein Roe Capital Opportunities fund is confident Univision has the leadership to keep it at the top of the charts. "Univision has outstanding management that has proven it can guide the company through rapid growth, rather than blowing up," Brady says.